This thesis consists of three chapters. The first two chapters explore the effect of career concerns on communication by multiple experts. The third chapter addresses corporate governance as a double layered moral hazard. The first two chapters relate to a model where a decision maker acts over two periods on the advice of two imperfectly informed experts. Both experts are possibly biased, but in opposite directions. The decision maker can only rely on the experts' reports to determine a course of action, as he never observes the true state of the economy. I show that the experts may report in the opposite direction of their possible bias not only for reputational reasons, but also as a strategic response to the possibility of misreporting by their counterpart. This model also provides a new justification for conformity: an expert might send the same message as the other, not in order to look similar, but to distinguish herself. This is done by inviting comparison to the reliability of the other expert. I also show that a decision maker could discipline both experts to disclose their information by making one value the future more. Also, an expert might be made to tell the truth by being paired with another with high initial reputation. However, negative outcomes still persist, such as the possibility that unbiased experts end up misreporting their signals in order to disavow their perceived predisposition. In the third chapter I study self-dealing in organizations where investors are aware of the existence of different participants in a project. The model involves two-layers of moral hazard, where a manager acts simultaneously as an agent to an investor and as a principal to the employees of the firm. The manager's role is to determine the allocation of the uncontractible resources at his discretion. The optimal executive compensation offered by the investor takes into account the ease with which the employees exert effort and the trade-offs that arise in the process of committing resources.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:617780 |
| Date | January 2014 |
| Creators | Nica, Melania |
| Publisher | London School of Economics and Political Science (University of London) |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://etheses.lse.ac.uk/955/ |
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